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NY Times Lowering Dependency on Traditional Advertising

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Advertising, which remains a significant source of revenue, is largely dependent upon the global financial health. Softness in advertising demand has been weighing on The New York Times Company’s (NYT - Free Report) performance. Consequently, the company is trying every means to shield itself from the impact of an unstable market and contemplating on new revenue generating avenues.

The New York Times Company has been adding diverse revenue streams, which include a pay-and-read model to make it less vulnerable to economic conditions. The company is also adapting to the changing face of the multiplatform media universe, and has already included mobile and reader application products to its portfolio. Other publishing companies such as Journal Communications, Inc. , The E.W. Scripps Co. (SSP - Free Report) and Gannett Co., Inc. (GCI - Free Report) are also trying to adapt to different revenue generating ways.

Despite hiccups in the economy, what still guarantees revenue generation is The New York Times Company’s pricing system for, which was launched on Mar 28, 2011.

The publishing industry has long been grappling with sinking advertising revenues. A longer-term secular decline has resulted as more readers are choosing free online news, thereby making the print-advertising model increasingly irrelevant. To curb shrinking advertising revenues and seek new revenue streams, the publishing companies contemplated charging readers for online content.

Earlier, The New York Times Company hinted that total advertising revenue in the second quarter of 2014 would decline in the mid-single-digit range due to challenging year-over-year comparisons.

In an effort to offset declining revenues and shrinking market share, publishers are scrambling to slash costs. The New York Times Company has been realigning its cost structure and streamlining its operations to increase efficiencies, and in turn the operating performance.

The company is also offloading assets that bear no direct relation to its core operations in order to re-focus on its core newspapers and pay more attention to its online activities. The company has plans of introducing a new line of digital products and services to lessen its dependency on traditional advertising.

Currently, The New York Times Company carries a Zacks Rank #3 (Hold).

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